External environment of taj & oberoi hotel industry

Industry Analysis – Desk Research
A Report On
External Environment of Taj & Oberoi
Hotel Industry
Guided By : Prof. Dr. A. Ghosh
Submitted by :
Saurabh R. Giratkar
(M3146083)

3. EXTERNAL ENVIRONMENT
Co ntro lling Ministry
The Ministry of Tourism is the nodal agency for the formulation of national policies
and programmes and for the co-ordination of activities of various Central Government
Agencies, State Governments/UTs and the Private Sector for the development and promotion
of tourism in the country. This Ministry is headed by the Union Minister of State for Tourism
(Independent Charge).
The administrative head of the Ministry is the Secretary (Tourism). The Secretary also
acts as the Director General (DG) Tourism. The office of the Director General of Tourism
{now merged with the office of Secretary (Tourism)} provides executive directions for the
implementation of various policies and programmes. Directorate General of Tourism has a
field formation of 20 offices within the country and 14 offices abroad and one sub-ordinate
office/project i.e. Indian Institute of Skiing and Mountaineering (IISM)/ Gulmarg Winter
Sports Project. The overseas offices are primarily responsible for tourism promotion and
marketing in their respective areas and the field offices in India are responsible for providing
information service to tourists and to monitor the progress of field projects.The activities of
IISM/GWSP have now been revived and various Ski and other courses are being conducted
in the J&K valley.
Role and Functions of the Ministry of Tourism
The Ministry of Tourism functions as the nodal agency for the development of
tourism in the country. It plays a crucial role in coordinating and supplementing the efforts of
the State/Union Territory Governments, catalyzing private investment, strengthening
promotional and marketing efforts and in providing trained manpower resources. The
functions of the Ministry in this regard mainly consist of the following:

All Policy Matters, including: Development Policies Incentives, External Assistance,
Manpower Development, Promotion & Marketing.
The Ministry of Tourism, Government of India has set some guidelines for the star
classification as given in the table

TAJ Ho te l
Founder Jamsetji Tata
Headquarters Mumbai,Maharashtra, India
Key people MD & CEO
RakeshSarna
The Indian Hotels Company (IHCL) and its subsidiaries, collectively known as Taj
Hotels Resorts and Palaces, is one of Asia's largest and finest groups of hotels. Incorporated
by the founder of the Tata group, Jamshedji Tata, the company opened its first property, the
Taj Mahal Palace, in Bombay in 1903. The Taj, a symbol of Indian hospitality, completed its
centenary year in 2003. Taj Hotels Resorts and Palaces comprises 93 hotels in 53 locations,
including 25 Ginger hotels across India, with an additional 16 international. From world-
renowned landmarks to modern business hotels, idyllic beach resorts to authentic grand
palaces, each Taj hotel offers an unrivalled fusion of warm Indian hospitality, world-class
service and modern luxury. Areas of Business:
Taj is their flagship brand for the world's most discerning travellers seeking authentic
experiences given that luxury is a way of life to which they are accustomed. Each Taj hotel
reinterprets the tradition of hospitality in a refreshingly modern way to create unique
experiences. Vivanta - IHCL unveiled brand Vivanta in September 2010. It is positioned as a
premium brand below the “luxury” bracket occupied by brand Taj. The company utilised
social networking sites such as Facebook and Twitter as well as news agencies such as the
BBC and the FT to create a global buzz around the new brand. Gateway is a pan-India
network of hotels and resorts that caters mainly to business and leisure travellers and is
designed, keeping the modern nomad in mind. It is more about simplicity compared to the
above two segments. Ginger is their revolutionary concept in hospitality for the value

segment. Intelligently designed facilities, consistency and affordability are hallmarks of this
brand targeted at travellers who value simplicity and self-service.
Strategic Outlook The Taj Group of Hotels comes under the “Star” category in the
BCG matrix drawn for the TATA group the reason being the highest market share of 7% as
mentioned above and the high industry growth rate. Travel accommodation sees outlet
growth of 9% and current value growth of 21% in 2010.
The Taj Mahal Palace inMumbai is the first hotel of Taj, opened in the year 1903
In 1974, the group opened India's first international five star deluxe beach resort, the Fort
Aguada Beach Resort in Goa. In 1970s, the Taj Group also began its business in metropolitan
hotels, opening the five-star deluxe hotel, Taj Coromandel in Chennai, in 1974, acquiring an
equity interest and operating contract for the Taj President (now Vivanta by Taj - President),
a business hotel in Mumbai, in 1977, and also opening the Taj Mahal Hotel in Delhi in 1978.
The group has been converting royal palaces in India into luxury hotels since the 1970s. The
first palace to be converted into a Taj luxury hotel was the Lake Palace in Udaipur, in 1971.
Other examples include the Rambagh Palace in Jaipur, Umaid Bhawan Palace in Jodhpur,
Falaknuma Palace in Hyderabad and Nadesar Palace in Varanasi. A part of the Umaid
Bhawan Palacein Jodhpur is a Taj luxury hotel and it is a member of the Leading Hotels of
the World.

To p 3 P la ye rs
1. Taj Mahal Hotel, Mumbai.
2. Taj Hotel, Delhi.
3. Taj Hotel, Jaipur.
Ac tio n by S EB I
The Indian Hotels Company Limited (“the Company”) has been practicing good
Corporate Governance even before Securities Exchange Board of India (SEBI) made it a
mandatory requirement from 2001. Out of more than 5000 companies listed with the BSE
Limited, the Company is categorized as an "A Group" Company which group comprises only
200 companies and the criteria for selection is based on Market Capitalisation, Liquidity,
Industry Representation, Listed History and track record of Compliance. Being a TATA
group Company, the Company goes beyond the mandatory requirements of Corporate
Governance and conducts business in a fair and transparent manner. It maintains good
investor relationships and endeavors to deliver to investor consistent quality services. quality
services.
Prohibition by SEBI
Neither the Company, nor the Directors or the Promoter Group Companies, or
companies with which the Company’s Directors are associated with as directors or
promoters, have been prohibited from accessing or operating in the capital markets under any
order or direction passed by SEBI. Further, none of the directors or person(s) in control of the
Promoter have been prohibited from accessing the capital market under any order or direction
passed by SEBI. Further neither the Promoter, the Company or group companies has been
declared as wilful defaulters by RBI / Government authorities. Eligibility for the Issue The
Company is an existing company registered under the Companies Act whose Equity Shares
are listed on the BSE and NSE. It is eligible to offer this Issue in terms of Clause 2.4.1(iv) of
the SEBI (DIP)
SEBI vide it’s Circular No. CIR/MRD/DP/10/2013 dated March 21, 2013 has
instructed all Companies for usage of electronic payment modes for making cash payments to
the investors. Companies whose securities are listed on Stock Exchanges are directed to use,
either directly or through their RTI & STA, any Reserve Bank of India approved electronic

mode of payment such as ECS [ECS (Local ECS) / RECS (Regional ECS) / NECS (National
ECS)], NEFT etc. Thus, Members are requested to kindly provide their requisite bank
account particulars by quoting their reference folio number(s) if shares are held in physical
form. If shares are held in demateralised form, Members may kindly provide the requisite
bank account details to their Depository Participant, to ensure that future dividend payments
are correctly credited to the respective account.
The Securities and Exchange Board of India (SEBI) has mandated the submission of
Permanant Account Number (PAN) by every participant in securities market. Members
holding shares in electronic form are, therefore, requested to submit their PAN to their
Depository Participants with whom they are maintaining their demat accounts. Members
holding shares in physical form can submit their PAN details to the Company. Members
holding shares in single name and physical form are advised to make nomination in respect of
their shareholding in the Company. Members holding shares in physical form are requested to
kindly notify the Company of any change in their addresses so as to enable the Company to
address future communication to their correct addresses. Members holding shares in demit
form are requested to notify their respective Depository Participant of any change in their
addresses.

Impa c t o n Industry
Indian Hotels stand alone in 3rd quarter revenues were 10.8% , while income for Taj
Mahal palace, Mumbai , was at 15% yearly. The occupancy rate stood at 64% in FY 2009,
while Average room rates have recorded at steady growth at 7%. PAT weighed down by
higher tax rate but lower interest cost helped cushioned the decline to an extent. High
inflation in 2010 – increase in RM. Opening of new Taj Falaknuma palace, in Hyderabad –
increase in expenses in marketing & advertisement.
Decrease in profit by 4.6%. But after construction- increase in profits upto 29%.Thus
overall 2011 performance of Taj Hotels were up to margin.

Env iro nme nta l & Glo ba l Issue s
The Lake Palace, Udaipur
Energy Conservation Initiatives
 Energy cards are placed in the guestrooms and energy conservation
training's are conducted for the staff.
 Bulbs used in the hotel are energy efficient bulbs such as CFL, Fluorescent
 Road lights, Public area and corridor lighting have centralised on/off control
operated by photocell.
 Economisers are used in the boiler to recover the heat from the hot exit gas,
which is used for preheating the water fed to boiler
Water Conservation Initiatives
 Orifice is provided in each water outlet to monitor the water usage
Solid waste management Initiatives
 Old carpets are reused as far as possible otherwise sold to the scrap
contractor.
Wherever possible, reduce, reuse, and recycle waste is adopted for food,
plastic, water or any waste material.
Other Initiatives
Taj Group's Environmental Initiative promotes the cause of being "Eco - Friendly".
Being Eco - Friendly means working in harmony with the environment, creating a
positive impact on the finite resources available on this planet so that we can
preserve it for future generations and ourselves. We at Lake Palace Hotel are
engaging ourselves in certain Eco-friendly measures as....
o Using both sides of paper for internal communication to save a few trees.
o Judicious use of light and other forms of electricity so as to reduce energy
consumption thereby reducing dependence on fossil fuels and other energy
sources.
o Helping our people understand dire need to use water in the right quantity
and avoiding wastage.
o Wherever possible substituting cloth for paper and adhering to usage of
handmade paper.
Risk Management: Economic Risks: The hotel sector may be unfavourably affected
by changes in global and domestic economies, changes in local market conditions, excess
room supply, government policies and regulations, fluctuations in interest rates and foreign

exchange rates and other natural and social factors. Socio-Political Risks: The Hotel industry
faces risk from volatile socio-political environment, internationally as well as within the
country. India, being one of the fastest growing economies of the world in the recent past,
continues to attract investments. Security Risks: The Hotel industry demands peace at all
times to flourish. The biggest villain in South East Asia has been terrorism supplemented by
political instability. Risk of wage inflation: The hotel industry needs quality employees and
with demand for the same improving across the industry, the Company feels that wage
inflation would be a critical factor in determining costs for the Company. Foreign Exchange
Risk: The Company may be impacted by the fluctuation of the Indian Rupee against other
foreign currencies. To mitigate this risk the Company has migrated to single currency billing
in Indian Rupees.
In the hotel industry there is usually another hotel just around the corner. They appear
in all price ranges, with varying levels of service and amenities. The constant challenge will
always be to get the guest to choose your hotel over the competitor. The internet makes the
overall market more efficient.
The Taj Mahal Palace, Mumbai commits itself to:
Continually improving its environmental and social sustainability performance and
Benchmarking : Establishing, implementing, maintaining and continually improving its
Environmental. Management System; Complying with all relevant legislation and regulations
and other requirements to which the hotel subscribes which relate to its environmental
aspects; Striving to achieve international best practice in key areas such as greenhouse gas
emissions; energy efficiency, conservation and management; management of freshwater
resources; ecosystem conservation and management; management of social and cultural
issues; land use planning and management; air quality protection and noise control; waste
water management; waste management and storage of environmentally harmful substances;
prevention of pollution including efficient use of resources, reuse recovery and recycling.
The Taj Mahal Palace, Mumbai has appointed the Chief Engineer, Mr. Shirish Wagh
as the Co-ordinator, who has responsibility for ensuring ongoing environmental performance,
identification of environmental risks, recording and monitoring of impacts and implementing
environmental and social sustainability measures.

3. EXTERNAL ENVIRONMENT
Obe ro i Ho te l

Industry Hospitality
Founded 1934
Founder Late Rai Bahadur Mohan Singh Oberoi
Headquarters Delhi, India
Key people PRS Oberoi,Vikram Oberoi,Arjun Oberoi
Website Oberoi Hotels & Resorts
The Oberoi Group is a global hotel company with its head office in Delhi. The
Oberoi, founded in 1934, owns and/or operates 20+ hotels and two cruisers in five countries.
It remains one of the most decorated hotel chains in the world with many of its group hotels
bagging various awards and accolades from Travel+Leisure, Condé Nast Traveler,Forbes and
World Travel Awards. The foundations of the Oberoi Group dates back to 1934 when Rai
Bahadur Mohan Singh Oberoi, the founder Chairman of the group bought from an
Englishman; two properties - The Clarke's in Delhi and The Clarke's in Shimla. In the
following years Mr. Oberoi, assisted by his two sons, Tilak Raj Singh Oberoi and Prithvi Raj
Singh Oberoi continued the expansion of their group with properties both in India and
abroad.
Today, P.R.S.Oberoi is the Chairman of The Oberoi Group and his son, Vikram Oberoi and
his nephew, Arjun Oberoi serve in the capacities of Joint Managing Directors at EIH Ltd and
EIH Associated Hotels, the two major holding companies of The Oberoi Group. The group
also manages hotels under the Trident brand, and operates properties in India and Saudi
Arabia. The Group also operates the The Clarke's in Shimla and the Maidens Hotel, Delhi.
These two properties however are not held under the Trident or under the Oberoi brand. The
Clarke's, after remaining temporarily shut following its lawns caving in because of
construction in the eco-sensitive vicinity, reopened on September 16, 2012.
P o lic ie s

Arrival and Departure Policy
Check in - 1400 Hours Early arrival is subject to availability. For guaranteed early check-in,
reservation needs to be made starting from the previous night. Check out - 1200 Hours Late
check-outs are available on request and subject to availability. A recent Government
notification requires guests to present proof of identity at the time of check in. Guests are
requested to carry with them the required document during their travel.
Guarantee Policy
All bookings must be guaranteed at the time of reservation by a Credit Card or Travel
Agency. All major credit cards are accepted.
Cancellation Policy
Reservation must be cancelled 72 hours prior to the planned date of arrival. Reservations
cancelled within 72 hours of the arrival date will incur a cancellation fee equivalent to one
night’s accommodation charge.
Child Policy
Two children up to 8 years of age can stay in the parent's room without an additional charge.
However, a maximum of one child's bed can be placed in a room which will be provided at
no additional charge.
Env iro nme nta l issue s

With the mercury rising water and power scarcity has hit the country hard and how. As the
need to be eco-sensitive gains momentum, we look at a few initiatives taken by hotels, which
could serve as easy examples.
The Oberoi, Mumbai has efficient systems in place for the management of water resources,
reveals executive VP Devendra Bharma, “Apart from the usual, we also use water from STP
for cooling towers. Sensors and flow restrictors notwithstanding, area-wise metering of water
consumption is undertaken to determine areas of high usage and initiate further conservation
methods.” Patu Keswani, CMD, Lemon Tree Hotels, shares that they use approximately 30
per cent of the recycled water from STP in the garden and flush systems. “We also have
rainwater harvesting and auto flush for public urinals in place,” he adds. “Our hotels are
designed and operated with zero waste-water discharge,” reveals Sunil Relia, VP,
engineering, The Leela Palaces, “To reduce site disturbance, green area provided is 25 per
cent more than the local norms and species selected are of native/adaptive nature to reduce
water consumption. We have efficient rainwater harvesting (RWH) system to recharge site
aquifer through recharge pits to reduce storm water run-off volumes post development and
these pits are cleaned and maintained periodically,” he elaborates.
A number of tools are used to control energy consumption and enhance energy efficiency —
integrated room automation system, VRV technology for air conditioning, HRV with thermal
enthalpy wheels, LED lighting in public areas, etc. “We have the world’s most energy
efficient and lowest emissions Trane CenTraVac chillers in air-conditioning systems. Their
energy consumption is as low as 0.57 KW per ton. The hotel also uses halon-free fire
extinguishers and chimney stack heights are maintained according to Pollution Control
norms,” explains Bharma. At Lemon Tree hotels, many steps are underway to bring down
power consumption or use renewable energy (wind power is being implemented in a phased
manner at the Chennai property followed by Aurangabad and Pune). “Reducing power
consumption is a key priority. Our hotels are designed so that entire floors can be shut down
if demand drops (unlike others, our AC and water lines are horizontal). We also use other
techniques and alternate sources to save energy. For example, Key Tag Energy Saver System,
Solar Panel for hot water, Wind Power and many more,” says Keswani. In light of its
commitment towards prevention of pollution and continual improvement in environmental
performance by controlling the impact of activities, products and services on the
environment, all Leela hotels adhere to save 10 per cent on energy cost year on year reveals
Relia, “We recognised the importance of alternate power source and established wind mills in
Karnataka. Incidentally, we are working on introducing solar power generation at our
Bangalore hotel,” he adds. The Oberoi practices benchmarking for energy consumption in
day-to-day operations, “Sub-meters monitor, target and control power consumption for
strategic areas. Energy benchmarks for daily operation volumes of various departments have
been set, and performance is monitored on a daily basis. The benchmarks are reviewed
quarterly for further scope of improvement. Energy audit has been conducted and methods of
improving energy efficiency are being implemented,” Bharma elaborates.
Glo ba l Issue s

While the management of Company continues to leverage the opportunities, it also
foresees the following challenges: Availability of skilled resources and acquisition and
retention of highly talented workforce which would ensure Frequent amendments in
regulations Lack of supporting infrastructure such as roads, highways, electricity, etc. that
can hamper the growth of real estate as it thrives on availability of good infrastructure.
Increase raw material / labour cost.
Training and Orientation of New Staff is also a big issue. System can be also a big
issue for hotel industry. Strategy making is difficult in hotel management. And again the
Competition this is one of the global issue for oberoi hotel. After 26/11 attack Economic
Slowdown is increases and becomes the global issue for oberoi as well as taj hotel.
Impa c t o n ho te l industry

To p 3 P la ye r
Three Oberoi hotels have been ranked among the six best in the world in Travel +
Leisure magazine's World's Best Awards 2008. The Oberoi Rajvilas, Jaipur. The Oberoi

Udaivilas, Udaipur and The Oberoi Amarvilas, Agra have been rated 2nd, 4th and 6th
respectively.
Annual Grow Rate
MARKET SEGMENTATION-OVERALL

Hotels- heavily regulated by both central and state governments including but not limited to
approvals, licenses, sanctions. Procedural changes making land available for hotel
construction(India identified 32 villages to become tourists hubs).100% FDI allowance.
Change in Government regulations – changes within the industry(change in tax laws
Gas Price.
CRITICAL SUCCESS FACTORS OF OBEROI HOTELS
Technology related:-Used of advance technology in hotel premises. Manufacturing- related:-
High utilization of fixed assets. Serving customer according to their specification.
Distribution-related:- Presence of hotel chain at various places.A strong network.
Marketing related:- Breadth of product line and product selection.

Comparison of Taj & Oberoi
8.6
9.4
5.7
1.2
3.4
0
2
4
6
8
10
Marriott Hilton Taj Hyatt Oberoi
MARKET SHARE
Percentage

External environment of taj & oberoi hotel industry

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